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I’ve done an about face on the direction I think cell site (towers and rooftops) lease rates will head. I can eat crow. I have a feeling I’d better grow quite fond of it. I’ve written dozens of articles warning of a bubble in telecom industry that could seriously impact the cash value of the 300,000 plus cell site leases.

My thesis for the telecom lease financial decline was/is based on fixed assets getting hit by the realization that we are burdened with government debt that we cannot possibly service, a sustained stock market correction, or a foreign market collapse. There are too many triggers to even contemplate and the world’s economy is a ‘house of cards’. But for the near future, the fundamentals seem to suggest continued increases in cell tower sales, more co-locations and consolidations, which should benefit the landlords with the potential to negotiate better leases and to renegotiate existing leases.

Crown Castles purchase of almost 10,000 AT&T cell towers in 2013

American Tower in talks to buy 7,000 towers from Verizon

Average number of carriers on each cell site has gone from 1.8 to 2.2 in last 10 years

I admit it. I didn’t see this coming. The last few lease re-negotiations we’ve done has sparked a new fever in this adviser. The cell phone carriers and tower operators didn’t roll over and play dead in the re-formation of the underlying leases. Not by a long shot, but they were much more receptive to, let’s just say, ‘better terms’ and in some cases would re-negotiate a lease with a longer time remaining before the lease was to expire.

Does this mean that termination of leases will not occur in the future? Because of the consolidations (sub-leasing by one carrier or cell tower operator, to other carriers) should free up some single carrier towers for termination. This trend is shown in the average number of carriers per cell site, increasing from 1.8 to 2.2 in the last 10 years.

The number of cell sites has almost tripled in this same time period. There are a few ‘holes’ left in coverage, but most of these will be filled by the smaller carriers and eventually, these will be absorbed by the Big Four (AT&T, Verizon, Sprint/Nextel and T-Mobile) to complete their needs.

Andrew G Kellerman’s expertise is in the telecom industry, dealing with many Fortune 500 companies. Background in stocks, bonds, commodities,and options as VP for Thomson KcKinnon, with over 30+ years in all aspects of real estate and mortgages.

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